When the housing market slump hit in the mid 2000s, many parcels of undeveloped land were left unsold as developers pulled back on their construction plans. With the market recovering, as of the publication date, land has bounced back to become a hot commodity. Selling undeveloped land requires specific marketing knowledge, an understanding of the land you own and its development possibilities, cooperation from local lenders and the possibility of financing the purchase of the land yourself.
Do Your Research
Contact your county’s planning and zoning office and request a map showing the boundaries of your undeveloped land, including existing easements, what part of the land can be developed and its current zoning. Understand where ingress and egress are possible, as this is important to developers. These factors determine its value to a buyer, especially the zoning classification as it determines how the property can be developed. Start to build a portfolio of your land to give to potential buyers.
Undeveloped land contains no utilities. Contact your local utility departments such as power, communications, water and sewage to determine the cost of bringing these utilities to the property. Gas, solar and wind power are additional utilities that can be investigated. If mineral and timber rights are included, be prepared to offer your terms to the buyer.
Meet with your local banker who is familiar with lending on undeveloped land. A branch of a national bank won’t be as knowledgeable as land loans aren’t a large part of its lending portfolio. Discuss the viability of a loan for a buyer, and include this link in your portfolio of information as it opens the lending door to a potential buyer.
Real Estate Agent
A local real estate land-sales agent can give you a reading of the market. Ask for comparables for undeveloped and vacant land that has sold during the past six months and at what price per acre. Price your land realistically to attract buyers. Investment networks may contact you regarding adding your land to its books. The networks pay less than market price as they’re purchasing to resell.
A local buyer may ask for seller financing. If cashing out isn’t imperative, consider this option as you have little downside. Ask for a substantial deposit and give terms that are slightly above the local norm for commercial land loans. Offer the buyer your terms. For example, the term of “clear title” -- meaning the buyer has the right to resell the land to a third party or to obtain other financing as long as he is current in his payments. Other terms are selling under a “land contract,” wherein you hold the title while the buyer makes payments, or “equitable title” meaning the buyer can develop the land for his personal use but cannot resell or refinance it.
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